The Perils of
Outsourcing

Ah, offshore
outsourcing--while enraging its opponents, it's all the rage among it's
proponents. And because the arguments are all simplistic, let me point some
things that are either unrecognized or deliberately
avoided.

Successful offshore
outsourcing requires at least two necessary conditions which are rarely found in
the under developed countries such outsourcing goes to--political stability and
reliable legal systems. So short term success based on recent historical
circumstances can not be used as assurance for continued success. Consider what
would have happened if American companies had outsourced production and services
to Yugoslavia during the period of stability caused by the dictatorial rule of
Marshall Tito? And if an x-ray is misread by some Asian practitioner and an
American dies or is seriously impaired as a result, what legal system does the
injured party turn to for redress?

But there is something else.
When an American purchases a product manufactured in some underdeveloped country
and has trouble with it, he returns it to the store from which it was purchased.
He is not required to deal directly with the people in the country in which the
product was manufactured. However when services are outsourced offshore, the
American using the service must deal directly with the foreigners involved. This
direct communication complicates the issue considerable.

Communication can be
difficult, because even if the foreigners speak English, they do not speak
American dialects, and anyone who watches the English programming often
broadcast on PBS or the History channel knows how difficult understanding
foreign dialects can be. Then there is the deep-rooted disdain that Americans
have had for foreigners. Rarely are they considered our equals. Couple that with
the fact that Americans are not widely loved throughout the world, as anyone who
watches the news should now be aware of, and a circumstance emerges which is
potentially rife with conflict. Can we really rely on people who don't really
like us to provide the kinds of services we are used to when those people also
know that we look at them with disdain? And when an American becomes incensed at
the poor service s/he receives in such circumstances, the only resort is to take
it out on the company which has outsourced the service. What impact will that
have on customer relations and the ultimate bottom-line? No one has any
idea!

So
those businesses that think that just because manufacturing outsourced offshore
has not had negative effects on the companies that engaged in the outsourcing,
it by no means follows that companies outsourcing services offshore will fare
just as well. The circumstances are entirely different, and such outsourcing
could very well be a disaster in the making. (DMN 5/23/2004)